The Cabinet had in May given in-principle approval for IDBI Bank's strategic disinvestment along with transfer of management control. The central government and LIC together own more than 94 per cent equity of IDBI Bank.
LIC, currently having management control, has 49.24 per cent stake, while the government holds 45.48 per cent. Non-promoter shareholding stands at 5.29 per cent. The last date for submission of bids by both transaction advisor and legal advisors is July 13, the Department of Investment and Public Asset Management (DIPAM) said.
''DIPAM on behalf of the Government of India (GoI) proposes to engage one Transaction Advisor from reputed professional consulting firms / investment bankers / merchant bankers / financial institutions / banks, for facilitating/assisting DIPAM in the process of strategic disinvestment of IDBI Bank Ltd. along with transfer of management control, till completion of the transaction,'' it said in the request for proposal (RFP) document. The transaction advisor would be required to advise and assist the government on modalities of disinvestment and the timing; recommend the need for other intermediaries required for the process of sale/disinvestment and also help in identification and selection of the same with proper Terms of Reference.
The transaction advisor will also assist in preparation of all documents like Preliminary Information Memorandum (PIM), organise roadshows to generate interest among the prospective buyers and suggest measures to fetch optimum value. The advisor would also be supporting IDBI Bank in setting up an e-data room and assisting in the smooth conduct of the due diligence process. As per the eligibility criteria outlined in the RFP, the bidders should have advised at least one transaction of strategic disinvestment/strategic sale/M&A activities/private equity investment transaction of the size of Rs 5,000 crore or more during the period from April 2016 to March 2021.
The extent of shareholding to be divested by the central government and LIC shall be decided at the time of structuring of transaction in consultation with the RBI, the government had earlier said. Insurance giant LIC had acquired controlling stake in IDBI Bank in January 2019. Finance Minister Nirmala Sitharaman in her Budget for 2021-22 had said the process of privatisation of IDBI Bank would be completed in the current fiscal. The government aims to mop up Rs 1.75 lakh crore in the current fiscal from minority stake sale and privatisation.
Of the Rs 1.75 lakh crore, Rs 1 lakh crore is to come from selling government stake in public sector banks and financial institutions, and Rs 75,000 crore through CPSE disinvestment receipts.